Member Sign In

You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating indiv idual securities.

If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.

What would you like to follow?

Relying on a handful of customers poses a great risk to the sustainability of one’s business. Currently, the perfect example of this is companies including, Cirrus Logic, Inc. (CRUS - Free Report) , Qorvo, Inc. (QRVO - Free Report) and Infineon Technologies AG (IFNNY - Free Report) , all of which have been affected by a high customer concentration.

It should be noted that Apple Inc. (AAPL - Free Report) is the largest customer of the aforementioned companies, and the firm’s sales of iPhones have been below expectations, particularly the latest one — iPhone X. Owing to the troubles, this January Apple slashed its production target by half from almost 40 million projected during the iPhone X release, per Nikkei.

Moreover, Apple reported a dismal iPhone unit sales performance in the first quarter of fiscal 2018 thanks to the lower-than-expected holiday season sales of its premium device iPhone X. For the quarter ending Dec 31, 2017, iPhone unit sales edged down 1% year over year.

Goldman Sachs’ latest prediction on iPhone sales has put further shadow on the growth prospects of Apple’s component suppliers. The investment firm, in its Mar 27 note, announced trimming iPhone sales expectations by a whopping 1.7 million units to 53 million, for the March quarter. Also, for the quarter ending June, the firm forecasts sales of 40.3 million units, a decline of 3.2 million from the previous projection.

Lesser production implies lesser component requirement, which, in turn, will have a substantial impact on suppliers.

Let’s see how the lackluster iPhone sales performance has hit the above-mentioned three major iPhone component suppliers.

Cirrus Logic is the worst affected company. The company generates more than 75% of its revenues by selling audio chips which are used in iPhone devices. During the last reported quarter, the company witnessed a 7.7% decline in revenues mainly due to the sudden fall in demand for smartphones in the later part of December 2017. Cirrus Logic provided a tepid outlook for the fourth quarter of fiscal 2018 too. This Zacks Rank #5 (Strong Sell) stock has depreciated 25.7% in the year so far.

Qorvo — a provider of radio frequency chips to Apple — also falls in the same category. Apple accounted for 34% of the company’s total revenues in fiscal 2017. Although the company’s last-quarter revenues were slightly affected, a disappointing revenue outlook for fourth-quarter fiscal 2018 indicates that it will be hit significantly by the iPhone X production cut. In the last month, shares of this Zacks Rank #4 (Sell) company have slipped 19.3%.

The third major component supplier likely to be affected by sluggish iPhone sales is Infineon Technologies. The company furnishes cellular basebands for Apple which forms the core chipsets used in iPhones. During the last-quarter earnings conference call, the company lowered its fiscal 2018 revenue outlook and provided a disappointing sales guidance for the fiscal second quarter. The Zacks Rank #3 (Hold) stock has lost 10.9% in a month’s time. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks Editor-in-Chief Goes ""All In"" on This Stock

Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.

Zacks Mobile App

Zacks Research is Reported On:

At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system. Since 1988 it has more than doubled the S&P 500 with an average gain of +25.26% per year. These returns cover a period from January 1, 1988 through December 3, 2018. Zacks Rank stock-rating system returns are computed monthly based on the beginning of the month and end of the month Zacks Rank stock prices plus any dividends received during that particular month. A simple, equally-weighted average return of all Zacks Rank stocks is calculated to determine the monthly return. The monthly returns are then compounded to arrive at the annual return. Only Zacks Rank stocks included in Zacks hypothetical portfolios at the beginning of each month are included in the return calculations. Zacks Ranks stocks can, and often do, change throughout the month. Certain Zacks Rank stocks for which no month-end price was available, pricing information was not collected, or for certain other reasons have been excluded from these return calculations.

Visit performance for information about the performance numbers displayed above.

We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms and Conditions of Service.